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tv   Mad Money  CNBC  February 7, 2013 11:00pm-12:00am EST

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siemens. answers. we asked total strangers to watch it for us. thank you so much. i appreciate it. i'll be right back. they didn't take a dime. how much in fees does your bank take to watch your money? if your bank takes more money than a stranger, you need an ally. ally bank. your money needs an ally. >> i'm jim cramer. welcome to my world. >> you need to get in the game. >> firms are going to go out of business and he's nuts! they're nuts. they know nothing. >> i always like to say that there's a bull market somewhere. >> "mad money," you can't afford to miss it. >> hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to save you a little money.
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my job is not only to entertain you, but to teach and coach you, so call me at 1-800-743-cnbc. what the heck do people want out of a company? what do people want out of a stock? how come you're not asked that company when an activist is suing the best performing company of our lifetime? isn't that what we have to consider today, on a day when the nasdaq lost .11%? let me set the stage for people who may not be up on what's happening. before i answer these incredibly important questions i just laid out. this morning david einhorn an excellent hedge fund manager announced he's suing apple because they want to block a suggestion of his. i said he says, that would aggressively return capital to its share hordes. einhorn want to stop them from amending their charter so he says it can't eliminate this possibility of offering a preferred security that he believes could give shareholders
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some major consistent return on investment, rather than the common stock of which he frankly said needs a little juicing. let's put it that way. he thinks it can do that. einhorn said this morning, while apple is a quote, a phenomenal company, creating iconic products that consumers around the world love, end quote, he's not happy with the way apple manages its finances. he wants apple to do more with its $137 billion cash hoard than it does right now. which is to pay a dividend of more than $10. yet, the stock has got a 2.3% yield. not high enough to stop any decline. on the other side is apple itself, which while it's generated a 1% for return over the last year, versus a 14% return for the s&p, that's underperformance, has given you 137% return over three years versus a 50% return for the s&p and most important, a 6,000% return -- you heard me right, a 6,000% return versus the s&p 118% performance in the last two
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years. that long term success has enabled apple to earn all that cash that's now bringing this cause of action. a cause of action that seems entirely baseless to me. apple said that the amendment that it's offering in its proxy would not prohibit what einhorn wants, that preferred security. if anything it's a statement that tells you that the company seems wide open to all suggestions. frankly, it gives you tremendous anticipation that something great can happen with that cash. as more pro shareholders than einhorn indicated with the incendiary lawsuit. apple has been able to give you its amazing return because it's followed the dictum suggested by the late founder steve jobs. if you produce the best products which arguably apple has done, everything takes care of itself. that's something that's resonated throughout much of steve jobs' biography about walter isaacson. it's a bedrock principle of apple itself. i have to admit i have grasped
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about apple lately. incredibly low interest rates, that keeps it from earning a decent return for doing nothing at the moment as you used to be able to for so long. i have said that the cash itself has gone from being a positive at a time when so many companies have stretched balance sheets to a negative as it generates a small return. i have suggested they put some of the cash to work, buying the growth that many feel has been lost. perhaps buying twitter to be more moving aggressively into the social media space. or netflix for home entertainment. or even somewhat facetiously purchase amazon, with its itunes-like offers. all that said i never thought in a million years that somehow apple's become a bad actor because of its conservative ways of handling its bank hoard.
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i have simply thought that it should be more creative at figuring out how to put it to use. never sue for them that. einhorn said it reminds me of his depression era grandma. he wants an annual 4% cash dividend, which he says could boost the faltering stock, at least by of late, several hundred dollars a share he thinks he can move it. let me say this. i run a charitable trust that has a stake in apple stock and i'm hard pressed to find one that does as good as apple. i could be more critical of the performance of thousands of other stocks and thousands of other managements than i would have before i would pick a fight with apple. that's why i think that why einhorn can question what they're doing with their cash, i think this is wrong headed move. as apple explained in a statement today, the company is in the midst of a colossal
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three year plan to return billions to its shareholders. that's hardly chump change. i think apple has the right to hold the cash that it has. this is a high quality problem to say the least. a total victim of success issue that can be solved by apple raising its own dividend very nicely and not creating a whole new class of preferred to do so, convoluted rube goldberg like. apple, through its own success has been able to accumulate that cash flow more rapidly than anyone including einhorn thought was possible. my understanding from this afternoon statement is that apple is totally open to doing just that, but i'm mindful that an increased dividend may not increase the value all that much. intel's yield has little impact on its stock. every manager wants a higher stock price for his holdings. it stands to reason because he's paid on the dollar size of the holding and in the case of the hedge fund, he can deliver.
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with such a huge percentage of the fund in apple, einhorn is restless. maybe like my daughter he's upset about the itunes generation, the change in the plugs. but i think the biggest crime being attributed to apple has nothing to do with apple at all. it has to do with the fact that the stock ran to $705 in a fit of irrational exuberance. had it done nothing, it was almost exactly the same price as it was last year at this time, would it be mired in this wrath? apple is not a victim of its own success. it is a victim of its stock's excess. excess that is more -- well, it's in excess of let's see -- say no more as the stock gone from being high price to low price in record time. i have no doubt that if the company were to institute a bigger buyback it would go higher. perhaps appreciably higher. but if apple were to do in 2013 what it's always done, create the finest products we have never thought of at a terrific price, that's what the market
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really wants and nothing else. that's what spurs the growth here, which is and always will be the magic elixir that all well performing stocks exude, including apple. let's not forget something else. the great thing about stocks is we are free to sell them. if einhorn is not happy, he's free to sell. he can sell any time he wants. if apple is too cheap, if it's price to earnings multiple of plus ten is too low, it will correct. so it could play with the house's money, they can afford for the market to reward apple with a more fair valuation eventually. otherwise, here's the bottom line. apple's superior products over the last decade, ten years, merit sticking with the company and certainly don't merit a lawsuit trying to pry more creativity out of the firm's cash management. everything else is just a parlor game. i'm confident that when the time comes, apple will put that money to work and i hope they raise the dividend big.
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until then, apple, you have earned our patience. people give it to them. let's go to kevin in florida, please. kevin? >> caller: hey, jim, thanks for taking my call. i just wanted to let you know you are the godfather of the stock market. >> you're too kind. thank you so much. >> caller: my question to you is, zynga has great numbers a few nights ago. is this the real deal or just the short squeeze happening? >> i think it's more of a short squeeze because they did guide down. i don't like that gaming business and i'm not crazy about the poker business online. look, could it go to five? yes. do i want to risk telling you to put your money in zynga? no. i think in many ways that's the more important take away. brad in california. >> caller: hey, jim, southern california dodger blue greetings to you. >> hey, pitchers and catchers. boo-yah. pretty soon. >> caller: spring training is in the air. i had a question pertaining to
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america's sweetheart giant macy's. i know it reported stellar same store sales today. where do we go from here, how do you trade this thing? >> i was doing a lot of work on macy's today. you know, i think terry lundgren is a terrific, terrific ceo. i think this was a remarkable quarter by macy's. shows you that its philosophy of having prestige, proprietary brands under one roof is working. i say buy buy buy. pull the trigger tomorrow morning. john in california, john? >> caller: jim, john, i'm in sacramento, california. >> man, my old stomping grounds. what's up? >> caller: okay. me and my buddy did our homework on qualcomm about a year ago. we've been hanging on there, did our homework. it seems to be finally coming around with all these mobile devices. what's your opinion on qualcomm? >> look, qualcomm has just had a remarkable run.
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i feel like i'm recommending the stock on a spike which i don't do. i would buy half and then hope it comes back to 62, 63 to buy the other half. i think your instincts about qualcomm are totally right. it's a real good company and a real good stock. a 6,000% return? i think -- i don't know about you i think that earns you a little leeway in this game. what apple really needs is the next big thing, that and some patience. "mad money" will be right back. coming up -- european invasion? the debt problems from across the pond fell off the front page to start the year. but old habits die hard. and tonight, cramer's tuning in to the issues overseas. is our european vacation over? stick around to find out. and later -- room service? is it time to book some room in shares of starwood hotels? from the st. regis to the w,
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cramer is checking it out the accommodations in the earnings exclusive with its ceo. all coming up on "mad money." don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer #madtweets. send jim an e-mail to or give us a call at 1-800-743-cnbc. miss something? head to
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look, you can never be complacent about anything as big as the wrenching economy that is still europe. i know i said they're not impacting us so far, but the measures put into place last year are still working. meaning that europe has shown a degree of stability is welcome, and i don't want anyone to sell our stocks because of the declining economies there. that would be spain and italy as well as a potential for a real plunge that no one is looking for -- france. my call has been the right call so far to start to 2013. in fact, it's been right call
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since the summer when mario draghi said he'd do whatever was necessary to preserve the currency union. he has done a great deal. now the free ride could be winding down. draghi talked about how the euro which is powered 10% higher versus the dollar is now too strong and how it's hurting european competitiveness. he did not however cut rates. taking back what his predecessor put through since the financial crisis erupted in 2008. i'm trying to be a diplomat here. it was a disaster. it helped make europe's crisis much worse than ours. where a fed chief after an initial they know nothing hesitation, then moves swiftly and brilliantly to the lowest rate setting possible, well below europe's rates on a percentage basis. by acknowledging that the european economy is staying weak, but by not cutting rates, draghi succeeded in doing one thing. he freaked out the world's markets.
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we for example look like we were going to have a pretty darn good day this morning before the opening, but then our futures dropped precipitously after draghi's statement. at the same time, it did get the euro down versus the dollar, something not welcome for our companies, but it's certainly welcome on the continent. i say if you cut rates, then you ought to have accomplished everything he wanted to really do and cement his reputation already somewhat deserving as a top-notch central banker, but he didn't, which prolongs the agony particularly when the countries are taking rigorous austerity steps and they need more help from the central bank. draghi's negative statements amount to a wake-up call. it's a wake-up call to put europe back on the map of our worries. even as we heard that europe is starting to stabilize from a
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host of companies, it's a decidedly mixed picture. in the fourth quarter conference call by the tremendously successful retailer ralph lauren we heard that the uk, germany and scandinavia are improving for the company, but italy and spain remain weak. we heard last night from worldwide giant news corp which is owned by my charitable trust which you can follow along, its italian business is soft. i keep hearing spain is turning. nevertheless, their 26% unemployment rate is worrisome to say the least. there is enough to merit a rate cut, but we know we won't get one any time soon after the meeting this morning. we know the financials took some hits because their financials are tied to europe. even though it's a much lesser degree than a few years ago. still that collateral damage is what happened before, because the statements of draghi were so frightful. the whole market had to come down at first.
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we saw the standard & poor's 500's indiscriminate knock down of companies in businesses in europe and companies that are 100% domestic. they put europe into a rosier perspective, but i do not believe we are done with the european-inflicted pain. perhaps the best thing to do right now is to fall to what happened last time when our stock market began to distinguish our domestic economy and those stocks that are dependent on it from from their domestic economy. as well as domestic health care companies that would support that. i would wait back to the other international companies until they cool off. i'm not advocating we have to keep one eye on europe again. all right. i am saying that we've got to keep both eyes on the world, and we were able to avert our eyes from europe for some time. while, look, we can still be opportunistic about domestic stocks. you simply can't be as aggressive now as you might have been in january about the
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internationals, given the run we have had, and the ongoing weakness that plagues the continent. but to get bearish because of europe, no. still not going there. there's still plenty to like on weakness. and yet, yet, again, i am a buyer on dips. including all that are inspired by european worries as we saw unfortunately again today. sandy in ohio, sandy? >> caller: yes. three granddaughter boo-yah to you today. i have a question on vodafone. because of their continued weakness in revenue primarily due to europe, but their increase in the united states with verizon wireless and the emerging markets, to me it makes the stake in verizon wireless more open to play. do you think they'll sell part or all of their stake in verizon wireless to offset the loss of revenue and if so, what effect would that be to europe, the
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united states and the emerging markets? >> i don't think they'll sell it because when a company has a lot of bad assets and when they have that one fabulous asset they don't sell it to fund the weaker assets because i think vodafone has great assets, but some are weak. i think it's status quo. vodafon yielded 3.8%, that's the current yield. the european one has changed. verizon has a 4.63% yield. doing very well. a much better idea to sell vodafone and buy buy buy verizon. let's go to dean in virginia. dean? >> caller: hey, big nittany lion boo-yah to you. >> unbelievable football record despite boo-yah. >> caller: i bought mcdonald's a few years ago and i have a 40-point gain thanks to your advice. since then they have upgraded or -- excuse me, invested heavily to upgrade their restaurants. should i go higher or take the money and run?
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>> i want you to sell half because i love playing with the house's money. now, that's just my rule. wouldn't matter how great the stock is. i'm going to say that. but i'll say this right here, right now. i think don thompson is about to embark on a series of technological marvels in the food department. there were two stories about how calories have come down in restaurants. i think mcd is a good stock to own. not inconsistent. i love playing with the house's money. europe is back on the radar again. doesn't mean you can't look for domestic opportunity, but you have to recognize that internationals and banks, they're going to be a little uncertain for some time to come. stay with cramer. coming up -- room service? is it time to book some room in shares of starwood hotels? from the saint regis to the "w" cramer is checking it out with the ceo. for over 75 years people have saved money with...ohhh...
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...with geico... ohhh...sorry! director's voice: here we go. from the top. and action for over 75 years people have saved money with gecko so.... director's voice: cut it! ...what...what did i say? gecko? i said gecko? aw...
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for over 75 year...(laughs. but still trying to keep it contained) director's voice: keep it together. i'm good. i'm good. for over 75...(uncontrollable laughter). what are you doing there? stop making me laugh. vo: geico. saving people money for over seventy-five years. gecko: don't look at me. don't look at me. tonight we're circling back to cramer fave starwood, hot. one of the best managed hotel names out there. we kicked off earning for the group. you may not have heard of starwood but you definitely heard of their brand, st. regis, luxury collection, "w" hotel, westin, sheraton, meridian. they have 1,134 properties in nearly 100 countries. they reported, it's no surprise that the terrific company beat earnings estimates by 5 cents and topped the revenue estimates.
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the revenue per available room, the key metric was up 4.1% worldwide. that's fantastic. the company of course gave inside guidance for next quarter. let's check in with the president and the ceo of starwood, find out more about the quarter and where the company is headed. >> great to see you again. great to be back. >> thank you. i have been talking on the show about how a lot of people feel valuations are extended. i keep hearing that. i'm looking what you've accomplished in the last five years an i'm trying to figure out when the company will get rewarded. you are so much better than you were and yet you're not getting that price yet for what your stock is worth. >> this an interesting thing. we're priced in terms of the stock was where it was before the crisis. we have 20% more hotels. we are more fees generating our revenues than ever before. our balance sheet is in great shape. this is a transformation. yeah, the star is up from where
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it was, but i think there's still upside as we move forward. >> do you have to do anything with the capital structure to demonstrate that change? we have seen what marriott does. they've done a spin for time share. we have seen others do real estate investment trusts or do you think the market will recognize and give you the reward you deserve? >> our focus right now is continuing to grow the fee business. so we have 300 hotels in our pipeline around the world. 85% of those are in emerging markets but the great thing about the management of franchise business is, there is no capital expenditure, you get unit growth and you get rev par growth and incentive fees. this is a cashless growth which is what investors like. >> i want to talk about just the issue of the globe. we are seeing on this show i feel others aren't, a resurgence in china. you're well positioned. an incredible comeback in latin america, particularly mexico. europe's stabilizing. i say it's good. in that environment, you have -- you have correctly placed your hotels.
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>> well, it's really interesting. for us, our business is so dependent on economic activity, business confidence and consumer confidence. you're exactly right. january in china our rev par numbers were up 6%. that's after a slow down. the government transitions almost behind us, chinese new year will be behind us. we see china picking up. latin america was the strongest growth region for two years in a row, slowed down last year because of argentina. we haven't talked about africa which is another place where global capital flows are coming in in ways we have never seen before. >> let's talk about china for a moment. we see china as having a big year in 2013. a lot of people had penalized your stock, taken it down to the -- well at that point into the 50s because they felt you were overexpanding in china. you're probably as a percentage of what people are putting their capital in, the highest of any of the companies i follow in terms of commitment to china? >> well, we're long term bullish on china.
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today, we have more hotel rooms in china than we do in europe. we have a third of our corporate growth coming from new hotels in china. by the way, these are great hotels. they're great management contracts and nobody wants our capital there. this is all cashless growth with local money being invested. >> now, there's also a perception both with china and for these other areas that your business is cyclical. but you laid out better than any company i know in a different industry that it's a secular growth story, travel. >> if you look at it, the global middle class has doubled from 1 billion to 2 billion. in the next 20 years it will go from 2 to 5 billion. this isn't your dad's five-year cycle business anymore. this is in fact a generational, a once in a lifetime shift in travel demand around the world. we are seeing it in places like
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dubai where it's a massive global crossroads for travel from everywhere around the world. >> at the same time, you talk in your -- you say our balance sheet has never been stronger and we have ten-year senior notes. should you do something massive? should you do what david einhorn suggested where you borrow the money and recapitalize because it's so cheap? >> with interest rates as low as they are, effectively central banks in europe, the u.s. and japan are creating free money. >> yes. >> so we want to be careful of though if there is another down turn we want to have a fortress balance sheet. we're playing this safe. you're right. if you wanted to take a risk you could certainly lever up and do that. >> but repurchase 6.3 million shares. >> it would be possible but the business we have, the underlying value we can creat means we want
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to play this safe, because we're going to be very successful just doing this business one step at a time. >> okay, is there a class of hotels that you're not in yet that you should be in? super, super premium, low low low? would that help? >> we're pretty much to the top of the market to the high end of the middle if you will. if you get below that, global brands don't matter as much. it's very hard to manage for a big profit margin. you need a lot of units to get the same kind of fee. so a typical sheraton in a place like china will do as much in fees as seven or eight mid market hotels somewhere else. >> i want to understand this, i follow marriott well. they had underperformed. they did this tremendous time share spinoff. your vacation -- start with vacation ownership. you're a major player in the vacation ownership business, that's the time share. if you just did a stroke of the pen and did what marriott did,
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your stock could appreciate 20% or 30%, no? >> we look at our timeshare business, we have taken about $1 billion in cash out of that business. >> okay. >> in the last four or five years. if we had spun that business off, we might have gotten that in an ipo. but we wouldn't own the business today. so we've got $150 million in ebitda, an ongoing concern, and the billion dollars we have used to pay down the debt. we like what we have done so far. >> but at the same time, i mean, clearly, you can't be happy. i mean, your stock is not reflecting all the greatness. >> well, there's more to come. as we look ahead, as we look at the development happening around the world, the unprecedented growth in demand for high-end travel, we can be patient in this business. >> and please -- do you have anything that is in wait for us for the united states that i haven't thought of? >> say that again? >> any new properties in the united states? >> we had the st. regis in bell harbor which was the most anticipated luxury hotel opening not just in the u.s. but in the world. right now we're selling units
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there -- residential units, we're 75% sold out. >> already? how many foreign? how many domestic? >> about 70% non-u.s. buying. >> in bell harbor? >> coming from latin america, canada, it's amazing. it's a u.n. of people with affluence coming into that market. >> only 30% american? w2, right? >> it's right down the street. >> it's a quandary. i was so glad you said you wanted to come on the show. you may be the largest. thanks to the president and ceo of starwood hotels. it's hot. it's going to get hotter. stay with cramer. coming up -- can you handle the heat? cramer gets you fired up for a searing hot "lightning round." ♪
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it is time, it is time for the "lightning round."
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my staff does this on the fly. we have this sound and then the "lightning round" is over. are you ready? it's time for the "lightning round" on cramer's "mad money." let's start with mitch in california. >> caller: hey, jim, listen i know you have a birthday coming up and the reason i know is because both my daughter and i share your february 10th birthday. >> we ought to have a joint shindig. >> caller: well, the reason i want to call, i want to be the first to wish you a father/daughter familial happy birthday to you. >> thank you so much. you made my day. what's up? >> caller: well, the stock i'm interested in is vector group. i know you have talked about this stock in the past. but between their big dividends, the recent high profile real estate buys and all the pieces of companies they own including optgo, i want to get your
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current opinion on the stock. >> i think it's a good stock frankly. the yield -- when bonds were higher i was uncertain -- i'd send people to altria. now, obviously it's a political question. you might not want the tobacco company. vector is good. susan is in michigan. >> caller: hey, stuttering boo-yah, jim. >> what's up? >> caller: conoco philips. >> natural gas has to go much higher for this thing to work. it doesn't have the growth. you are being paid to wait. all that said, there are so many better stocks in the oil patch. i don't want you touching that one. jason in massachusetts. jason? >> caller: hey, jim, i don't think that china is a concern for this one. you know, china -- >> yeah? >> caller: liquidity services, they just had a disappointment. and i don't know -- if you were
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them would you buy back stock here? >> if i were them, i'd have more research done on the company than i have. i can't give you a snap judgment. i do have to come back to liquidity services, because i was not surprised it didn't do well. so we have to come back and do more work. let's go to joey in maryland. joey? >> caller: boo-yah to you jim. >> boo-yah ravens. >> caller: oh, yeah. hey, i'd like to make a shout-out to court marks. >> okay. >> caller: i'm calling to ask about -- >> does he play left tackle? >> caller: no. >> anyway, go ahead. >> caller: all right. i'm calling to ask about booz allen hamilton holding corporation. >> good slow grower. i'm going to tell you -- it's not great, but good. i think that accenture is the king of consulting. let's go to al in illinois. >> caller: this is al from illinois. >> how are you? >> caller: fine. i bought bemis on your advice.
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>> well, 52-week high. it's been a real horse. by the way, so is that berry which has done very well. i like bemis. it does stand for buy my stock. let's go to ali in california. >> caller: great talking with you, mr. cramer. my question is mastercard. >> really interesting, stephanie link who is co-portfolio manager with me, we both said the same thing when we saw visa's number today. we said this group is played out for now. i think the credit card companies have to pull back. i would not be a buyer of visa and my trust sold mastercard and there are other fish in the sea. let's go to predeep in ohio. >> caller: thanks for taking my call. earthlink? >> no. earth link has almost no growth at all. don't buy.
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i think it's just moved up and it's time to trim. there's so many good internet plays. we don't need earth link. by the way, it's a communications company. i would go with verizon, century link, ctl. century link, that's a better one. very good yield. let's go to rob in florida, please. rob? >> caller: my daughter loves you too. >> okay. i thought that was an imitation of my in my high-pitched voice like my friend murphy does. how you doing, cramer? i can imitate murphy doing cramer. >> caller: first, i want to thank you on the recommendation of esb over a year ago. >> it's a horse, it's secretariat. >> caller: here's my ticker question. it's seh, which is star tech. i have done pretty well on it
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and they were acquired for $8 by poli one corps. the president was elected to the board of waste management because of her experience with plastics around environmental solutions. do i continue to ride the plastics wave or bail? >> we have to take advantage of the stocks that we like more at this point and i'm going to say if -- tell if you went in that particular sector i'm going to send you to georgia gulf. why georgia gulf? because that's the one that they just did a spinoff of -- by -- with ppg. i think that that represents the best value. it's now called axial. that's the one i want you to be in. let's go to art in illinois. >> caller: yes, sir, good afternoon. first time caller. my question for you, sir, what your thoughts are on leapfrog? >> everybody wants me to recommend this stock. you know, toy technology company. i don't need that. entertainment. there's so many good technology
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companies. you know what i would buy over that one? how about apple. down on its luck. and that, ladies and gentlemen, is the conclusion of the "lightning round." the "lightning round" is sponsored by t.d. ameritrade. coming up, with more than 30 years of experience, you've got the market's brightest mind at your disposal. so what are you waiting for? e-mail or tweet your most pressing questions. stay tuned to see if they get answered on the air. [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ]'ll bust your brain box. ♪ all on thinkorswim
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jim cramer looking out for you. >> thank you, sir, for helping us average joes. >> thanks for all you do for the small investors. >> thank you for sharing your knowledge with the every man. >> i love doing it for you. any time i can say thank you it's great. >> anywhere, any time. any place. answering the call of cramerica,
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weeknights 6:00 and 11:00 eastern on cnbc. a lot of people going to jim cramer or @jimcramer on twitter, including today, desean jackson, who took his picture with me and you'll notice my avatar and my dad and he's wearing number 10. so we absolutely have two number tens checking in. we have to do some work. let's do some mad tweets. here's a tweet from @nhermes7 who writes i'm curious what's your opinion on hewlett-packard? should i cut my loss or wait for new movement? i think hewlett-packard is probably one of the most intriguing stocks out there, because it fell down 40%, actually 44% last year. it's the worst performing stock in the dow. yet, the balance sheet is not that bad. they could clean up some debt, "the wall street journal" suggested that today. and the possibility that meg
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whitman can engender a turnaround means i would not sell the stock here. however, just so you know, she's going to get about a two-quarter honeymoon and if she doesn't turn it around, people will dump it again. let's own it for a couple quarters and see what happens. i didn't think the flexibility was available until i saw the dell leverage buyout. here's one from andy rush @arush82. he asks, in a market where most stocks trade so similarly, why do abbott which is abt, and abbv trade so differently? okay. these are a breakup story. we have liked abbott forever. it has been a long core position for my charitable trust. and we sold the abvy and we kept the abbott because abbott is the slower growth drug portion of the company and it has a 4% plus yield. they just had fantastic news
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that another company that is working on a competitive drug dropped their drug. the stock moved up. i like growth. abbott the other side has the growth, the diagnostics, medical devices. that's what you should own. that's what i kept for action alerts. here's a message from from @trimprobrandon. what's the deal with k key energy? i'm fresh out of school and trying to diversify with an oil that has a great peg rate. here's the problem with key. it's one of the largest service companies that are out there for oil service. has a lot of natural gas and the natural gas drilling has been cut dramatically in this country. once natural gas prices go up, key goes up. on the anti-fracking stories i understand the companies are using waste water to pump the fracking fluid with. you can imagine waste water, how is the epa going to fight that? apparently the waste water is cleaner when it is done. that's a story that involves heckman. that's a waste water company if
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you want to go into a service company with more risk, but certainly more reward. now, here's another tweet from @jgn74, it says can we dip a toe into petrobras yet? i had to reflect on the fact that pbr is my favorite beer. i like it on draft, i like it in cans. pbr is a stock, it's at $16. it has been horrendous. it seemingly goes down week after week, yet it still has a $100 billion market cap. if you want some brazil exposure, may i suggest you buy core labs? not that long ago, mr. demshur said they're getting giant brazilian work. i'd rather a derivative play
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than that oil company has a poor record of being shareholder friendly. we're back after the break.
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it happened again. another master limited partnership or mlp. and i think another win. this time, it is enterprise product partners with an 11 million shares price the other day at $54.56. a deal that executives have filed and participated -- all the sizable amounts no payment the tape stuff. of course it will be used to pay down debt so the company can expand again. that's the m.o. of the oil and
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gas limited partnerships. they're in the epicenter of the nascent oil and gas boom that people are buzzing about in this country. and they might be among the shrewdest oil companies of the land. they have pipe in eagle ford, permian, barnett and marcellus. it's the pipeline company that's just been -- that has about the best exposure to the petrochemical refineries that crave the natural gas liquid feeds stock. it transports liquid oil and refined products. and it pays 66 cents per unit each quarter. just giving -- i gave you a 6.5% increase. like many of the many others, they can't lay down pipe fast enough. even as its vast network would have every important field but the bakken covered. it's causing the bizarre
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dichotomy between the west texas and brent price and they're pumping out of cushing using the c-pipe. it used to go the other way. now there's so much oil going into cushing there's no room for this stuff. there's so much more oil though. that enterprise is expanding its pipe at a voracious pace to handle it. these master limited partnerships are notorious issuers of stock, they're a point and a half off the high. it did trade down from 55 to 49 not that long ago. the companies as part of the tax reform, it didn't. that said i still think it's a decent entry point to get some of this 4.79% yield. i'd put half on and hope it goes to a better yield. keep in mind this is the big daddy of the mlps with $50 billion market capitalization. it will sell down big if another big mlp offers stock. it has the biggest opportunity of all of them right now. i believe that's bigger even than kinder morgan and more than energy transfer partners.
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even as etp yields 7.7%. trust me, i learned the hard way that that yield can't make up for the price depreciation when they're as poorly run as etp was. my charitable trust sadly knows. stick with quality. it's obvious that the insiders are. who am i to say they're wrong? i just hope you get a chance to buy it underneath the price of the deal. that will be a bargain. this weekend at the super bowl, everywhere i went people asked me, in a low yield environment what represents the best yield right now with value? i pointedly said nothing, fixed income. you have to own master limited partnerships. i will tell you have not stressed these on this show, i have not stressed these kinds of stocks nearly enough. fortunately the biggest one just did a deal. the stock is only 50 cents above the low price. take advantage of it and buy some. if it goes down, buy some more. stick with cramer.
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